INDUSTRY OVERVIEWThe Medical Technology Industry in Germany

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THE MEDICAL TECHNOLOGY INDUSTRY IN GERMANY

as a guarantee of quality; nowhere

more so than in the medical device

sector. In 2012, global demand for

German quality saw almost 70 per-

cent of medical technology products

being exported to international mar-

kets. Domestically, more than 99

percent of the country’s 80 million

residents are covered by health in-

surance. Annual health care expen-

diture in Germany accounts for EUR

294 billion. In addition to expenses

reimbursed by health insurance pro-

viders, Germans spend an estimated

EUR 60 billion for health care out of

their own pockets.

With its state-of-the-art infrastruc-

ture and its central location in Eu-

rope, Germany is also an ideal

location for serving surrounding Eu-

ropean countries with an additional

potential market volume of more

than EUR 1,300 billion.

EUROPE’S BIGGEST MARKET

Global demand for innovative medi-

cal technology solutions continues

to grow as we live longer, healthier

lives. “Medical devices made in Ger-

many” make a significant contribu-

tion to enhancing patient health care

and quality of life around the world.

Medical technologies developed in

Germany benefit from a world-class

research and business environment,

with the sector’s predominantly

small and medium-sized companies

enjoying an international reputation

as innovators and market leaders.

Internationally, the “Made in Ger-

many” seal continues to be held up

Industry Overview 2013 www.gtai.com

HOSPITAL CAREIn Germany, 2,017 hospitals (2012)

with a total capacity of more than

half a million beds treat 18 mil-

lion patients annually. The average

hospitalization period is 7.6 days.

The country also has approximately

1,212 preventative care and rehabil-

itation facilities with nearly 169,000

beds (2012) that treat around two

million patients each year. The aver-

age rehabilitation stay is 25.5 days.

GERMANY’S HEALTH CARE SYSTEM

HEALTH CARE EXPENDITUREHealth care expenses in Germany

totaled EUR 294 billion in 2011, an

almost two percent increase over

the previous year. The amount is

equivalent to 11.6 percent of GDP or

EUR 3,590 per capita. Medical device

spending accounted for EUR 27 bil-

lion (2010).

HEALTH INSURANCEWith around 88 percent of the Ger-

man population enrolled in a public

health insurance plan, the public

health insurance system plays the

major role in the allocation of health

care funds. Eleven percent of the

population opt for private health in-

surance and less than 0.2 percent

are without any insurance.

Public health insurance providers

covered EUR 168.5 billion or ap-

proximately 57 percent of total

health care expenses in 2011. Pri-

vate health insurance companies

reimbursed an additional EUR 27.7

billion of medical expenses. The re-

maining amount is covered by gov-

ernment budgets, state-mandated

long-term care insurers, the social

pension fund, state-mandated ac-

cident insurance providers, em-

ployers, and private households.

IN- AND OUTPATIENT CAREOutpatient care accounts for nearly

50 percent of annual health expens-

es. The most significant outpatient

facilities included doctor’s offices

(EUR 43 billion) and pharmacies

(EUR 41 billion). Inpatient and par-

tial inpatient institutions accounted

for more than EUR 104 billion of

total expenditure, of which more

than EUR 74 billion were incurred

by hospitals.

3

GERMANY’S HEALTH SYSTEM FACTS AND FIGURES (2012)More than 99 percent of Germany s 80 million residents are

covered by health insurance.

Annual health expenses: EUR 294 billion (11.6% of GDP)

Hospital treatment expenses: EUR 62 billion

Outpatient treatment expenses: EUR 28 billion

Number of hospitals: 2,017 (1/3 private)

Number of hospital beds: 501,500

Diagnosis Related Group (DRG) System (hospital sector):

1,187 DRGs, 155 additional remuneration titles

Over 60% of hospital material demand provided by group

purchasing organizations (GPOs)

Number of active medical doctors: 348,000

Source: OECD 2013

Total Annual Health Expenditure in 2011

in E

UR

bil

lio

n

293.8

350

300

250

200

150

100

50

0Germany France UK Italy Spain

232.3

168.0

145.6

98.9

MARKET OPPORTUNITIES

THE MEDICAL TECHNOLOGY INDUS-TRY IN NUMBERS

The German medical technol-

ogy industry consists almost en-

tirely of small and medium-sized

enterprises, is highly innovative,

and generates a large portion of its

revenues through exports. Around

11,000 companies employ more than

170,000 people. In 2012, the ap-

proximately 1,200 medical device

manufacturers with more than 20

employees each generated EUR

22.3 billion in sales – an increase

of more than four percent over the

previous year. Export markets are

particularly important to German

companies – about two thirds of

sales in 2012 were generated out-

side their home country. Exports

grew nearly seven percent in 2012

to more than EUR 15 billion.

The SPECTARIS industry association

expects another four percent growth

for the German medical technology

industry in 2013. Key drivers include

the innovative strength of the sector,

the solid financial basis of most com-

panies, and a stable level of demand

in major health care markets.

MEDICAL TECHNOLOGY EXPORTS CONTINUE TO GROWMedical technology “Made in Ger-

many” is highly valued around the

world. Although the US remains the

largest single market and demand

from China continues to grow, the

largest share of German exports

stays within Europe. Approximately

38 percent of German exports go to

EU member states and another 15

percent to other European coun-

tries. North America accounts for

19 percent of exports while 18 per-

cent are shipped to Asia.

4

Source: SPECTARIS, German Statistical Office 2013

German Medical Device Manufacturer Revenue Development

25

20

15

10

5

0

2007 2008 2009 2010 2011 2012

Foreign Turnover

Domestic Turnover

German Medical Technology Exports by Destination

European Union 37%

Europe (non-EU) 15%

North America 19%

Asia 18%

Middle-/ South America 4%

Middle East 4%

Africa 2%

Rest of the World 2%

Sources: SPECTARIS 2013

In 2012, the greatest growth rates

in demand came from Russia

(+44 percent), the UK (+19 percent),

Japan (+18 percent), China (+17 per-

cent), and Austria (+16 percent).

The “Health Made in Germany” ex-

port initiative was created in order

to make it easier for German com-

panies to enter new markets.

in E

UR

bil

lio

n

6.4 6.6

6.9

7.2

7.2

7.2

11.3 12

.6

11.4 12

.8

14.2

15.1

Industry Overview 2013 www.gtai.com

MEDICAL TECHNOLOGY TRENDS

German medical technology is cut-

ting edge. Hundreds of companies –

nearly all of them medium-sized –

produce medical technology inno-

vations across the entire spectrum

of products. Many specialize in

very specific fields of applications

or types of products. While these

companies may focus on niche

markets, they are often world

market leaders in their respective

fields.

Thanks to close cooperation be-

tween universities, the private sec-

tor and hospitals, German medical

technology is developed with pa-

tients and users directly in mind.

Companies continuously strive to

improve their existing products.

One in three products on the market

has been developed within the last

three years. However, medical de-

vices are not the only focal point for

continuous improvement. German

medical technology companies also

offer package and system solutions.

These comprehensive packages

cover everything from delivery and

set-up to briefings, maintenance,

and beyond.

Another noticeable trend is the

personalization of health care. The

success of medical treatments can

be greatly enhanced through diag-

nostic tests that identify patients

most likely to be helped or harmed

by a new medication or therapy. The

combination of therapeutics and di-

agnostics known as “theragnostics”

is successfully applied in a wide

range of areas, including in-vitro

diagnostics and molecular imaging.

5

SIGNIFICANT MEDICAL TECHNOLOGY TRENDS AND DEVELOPMENTS

PROSTHESES AND IMPLANTSThe use of new materials has made it possible to produce gentler,

longer-lasting endoprostheses and implants. Thanks to modern

prosthetics amputees can enjoy near-normal mobility.

IN-VITRO DIAGNOSTICSIn-vitro diagnosis (IVD) consists of instruments and apparatus which

are used together with reagents for the laboratory or on-site exami-

nation of human samples. Innovative sub-areas include lab-on-a-

chip (LOC) technology, molecular diagnostics, immunodiagnostics,

decentralized diagnostics, and individualized medicine.

IMAGING SYSTEMSThe industry has made great innovative leaps in areas such as posi-

tron emission tomography (PET). Close integration of diagnostics and

therapy makes treatment easier for many patients and also helps to

reduce costs. A single whole-body PET/CT (computer tomography) or

PET-MR (magnet resonance tomography) examination can be used to

pinpoint tumors and plan radiation therapy.

E-HEALTHA rapidly aging population and decreasing numbers of specialized

medical practitioners in rural areas make it difficult for rural com-

munities to receive comprehensive medical care. Telemedicine can

help to fill these gaps and to provide better care at lower cost. An-

other example is “ambient assisted living” (AAL). With the aid of a

wide range of remote support services senior citizens are enabled to

live self-sufficient lives at home.

DEVICE AND SYSTEM NETWORKINGWith the increasing presence of technology in the operating room, the

need for improved interconnectivity and coordination has also grown.

The development of products for the connection of different operation

tools has accordingly increased. Modern operation and documenta-

tion software, for example, uses checklists to help prevent errors and

eliminates additional work by automatically generating operation logs.

OPTIMIZED HOSPITAL PROCESS MANAGEMENTIn the past, individual hospital departments conducted their own

planning and work was managed individually. To improve efficiencies,

disciplines are now becoming more integrated. As a result, processes

not only have to be planned appropriately, but all necessary data must

also be available at the right time and at the right place.

self-administration), as well as for

other medical devices of classes III,

IIb, or IIa and class I products which

are placed on the market in a sterile

condition or which have a measuring

function.

SELF-CERTIFICATIONMedical devices with minimal risk

can take advantage of the self-

certification process whereby the

manufacturer provides a declaration

of conformity before affixing the CE

marking to the product. Medical de-

vices with greater risk require volun-

tary certification by a notified body.

MEDICAL DEVICE CE MARKING CLASSESMedical devices, with the exception

of in vitro diagnostic medical devices

and active implantable medical de-

vices, are divided into four classes

(I, IIa, IIb, and III) according to Euro-

pean directives. Depending on the

class of product, conformity can be

established by the manufacturer or

with the involvement of a notified

body. Such intervention is neces-

sary for all active implants (in accor-

dance with Council Directive 90/385/

EEC), for in vitro diagnostic medical

devices (in accordance with Annex II

of Council Directive 98/79/EC or for

THE CE MARKING SYSTEM

MANDATORY CONFORMITY MARKINGAny medical device intended for the

German market must bear a CE

marking before it can be sold or put

into service. The CE marking is af-

fixed to certain products intended for

sale within the European Economic

Area (EEA) to indicate conformity

with the essential health and safety

requirements set out in European

directives. CE marking is the decla-

ration by the manufacturer (and ac-

ceptance by an assessment body)

that a product complies with relevant

directives. The fulfillment of all le-

gal requirements is determined in a

formal conformity assessment pro-

cedure called the Medizinprodukte-

gesetz (MPG – “Law on Medical De-

vices”).

MEDICAL DEVICE CE MARKINGThere are three European CE mark-

ing directives that specifically apply

to medical devices manufacturers:

The Medical Devices Directive

(MDD) applies to all general

medical devices not covered by

the Active Implantable Medical

Devices Directive or the In Vitro

Diagnostics Directive (93/42/EEC)

The Active Implantable Medical

Devices Directive (AIMDD) applies

to all active devices and related

accessories intended to be perma-

nently implanted in humans

(90/385/EEC)

The In Vitro Diagnostics Directive

(IVDD) applies to all devices and

kits used away from the patient to

make a diagnosis of patient medi-

cal conditions (98/79/EC)

6

The German Healthcare System: CE Certification of Medical Devices

Definition of Medical Devices: All products e.g. instruments, apparatus, materials, software or

other items that are designed for diagnosis, prevention, surveillance, treatment or

compensation of human illnesses, injuries or handicap

Please note that there are no general classifications by national law or EU rules.

Each product is categorized individually with reference to the intended use.

Source: MED Cert

Class I

Medical instruments

Crutches

Wheelchairs

Surgical beds

Bandaging

Dental filler

Diagnostic ultrasonic devices

Hearing aids

Contact lenses

Tooth crowns

Muscle and nerve stimulation

Class IIa

Class IIb

Anasthetic devices

Respiration devices

X-rays

Blood bags

Defibrillators

Dialysis devices

Condoms

Contact lense cleaner

Dental implants

Heart catheters

Endoprotheses

Coronary stents

Absorbable surgical sutures

Breast implants

Heart valves

Class III

Industry Overview 2013 www.gtai.com

CE MARKING MARKETSCE marking provides medical device

and technology market access to

EEA 30 and MRA (Mutual Recognition

Agreement) countries with a popula-

tion of almost 500 million. The cre-

ation of a single Europe-wide system

of health and safety conformity clas-

sification promotes quick design and

manufacture turnaround times for

swift European market entry.

REIMBURSEMENT BENEFITSSecure and sustainable market de-

mand offers excellent sales oppor-

tunities for medical device manu-

facturers and service providers.

The fixed lump sums of the Ger-

man diagnosis-related group (DRG)

system with 1,187 individual DRGs

make the hospital market transpar-

ent. Costs and frequencies of all di-

agnosis and therapies are accessi-

ble via the public InEK (Institute for

the Hospital Remuneration System)

G-DRG database report browser.

With 244 individual hospitals, a rep-

resentative sample of more than

two thousand German hospitals

provide individual data to InEK. InEK

concentrates DRG system manage-

ment functions on behalf of Ger-

many’s major health insurance as-

sociations and the German Hospital

Association.

REIMBURSEMENT STRATEGIESMedical products that do not sub-

stantially differ from available

products are likely to be included

in the system. This means they

will be available for regular pur-

chase by hospitals and purchasing

groups with the reimbursement of

individual procedures and equip-

ment in place. The German DRG

system provides operations and

procedures (OPS - Operationen- und

7

Prozedurenschlüss el) codes to clas-

sify reimbursed procedures as part

of a national version of the ICPM

(International Classification of Pro-

cedures in Medicine) system. The

demonstration of compatibility to

these already existing codes rep-

resents a critical target to achieve

for companies preparing entry into

the hospital market in Germany.

Where compatible codes exist,

price and quality in particular drive

the scale of sales. In the case of in-

novative products that do differ sig-

nificantly from the current state of

the art or have no comparable al-

ternatives, a new OPS code needs

to be established for reimburse-

ment purposes. Novel diagnosis

and treatment procedures (NUB -

Neue Untersuchungs- und Behand-

lungsmethoden) can be introduced

to the DRG system via an NUB ap-

plication which should be submitted

by a hospital claiming the need for

the innovative product. A successful

reimbursement strategy for medical

devices in the inpatient sector typi-

cally starts by securing individual

opinion leaders and gains strength

by securing the support of a plural-

ity of hospitals and health insur-

ance companies backing an NUB

application. In the outpatient sector,

the doctor’s fee scale (EBM - Ein-

heitlicher Bewertungsmaßstab) is the

index of items for billing of almost

all services in the public health in-

surance system. Fees can include

material and product costs with

practice supplies and consultation

overheads as well as expendables

treated separately. Similar to the

inpatient reimbursement regime,

an NUB procedure is in place for the

introduction of innovative products;

in this case, applications should be

submitted by patient, doctor or the

respective insurance provider.

Inpatient Sector Reimbursement Procedure (Hospital)

SHIpays prospectively

Request for NUB

DIMDIdefines

codes

Negotiate reimbursement for approved NUB

G - DRG

InEKcontrols

usage

Monitor for uptake to DRG adequate usage

correct coding

cost profile of difference

caused by new technology

New diagnostic

Hospital

Sources: www.ispor.org

8

R&D FRAMEWORK

INNOVATIVE STRENGTHThe German medical technology

industry generates one third of its

turnover from products less than

three years old. However, this is

only one indicator for the high level

of Germany’s innovative strength.

In terms of all European patent ap-

plications made in 2012, Germany

holds a share of around 18 percent

of the 148,494 patent applications

registered at the European Patent

Office (EPO). With 10,412 patent ap-

plications in 2012, the medical tech-

nology sector is leading Germany’s

sectors from the front. From a

global perspective, Germany was

second only to the US in terms of

number of medical technology pat-

ent applications in 2012.

RESEARCH AND PRODUCT DEVELOPMENTThe approximately 1,200 companies

(each with more than 20 employees)

active in the medical technology

sector invest around nine percent of

their turnover in R&D.

Close cooperation between Germa-

ny’s R&D institutes and equipment

manufacturers, not to mention a

plethora of in-house R&D facilities,

helps to maintain an internationally

unparalleled competitive edge. R&D

is considered to be among the most

important areas for the develop-

ment of the German economy. R&D

projects can count on numerous

types of financial support in the

form of grants, interest-reduced

loans, and special partnership pro-

grams, some especially created for

small and medium-sized enterpris-

es (SMEs).

R&D PROGRAMS FOR SMEs IN THE MEDICAL TECHNOLOGY SECTORAs part of the High-Tech Strategy, the

federal government provides extra

support to innovative SMEs in order

to maximize their potential. In 2009,

the Federal Ministry of Education and

Research (BMBF) and the Federal

Ministry of Economics and Technol-

ogy (BMWi) provided SMEs with over

EUR 950 million in technology fund-

ing. Two governmental support pro-

grams are of particular interest in the

medical technology sector.

KMU-INNOVATIV (“INNOVATIVE SME”)The BMBF has introduced the KMU-

innovativ (“Innovative SME”) scheme

to significantly improve SME ac-

cess to research funding including

simplified credit risk assessment.

A special call for medical device

projects was started within this in-

centives program at the end of 2011.

CENTRAL INNOVATION PROGRAM SMEThe BMWi’s Central Innovation

Program SME (ZIM) is a nation-

wide funding program for SMEs and

partner research establishments.

The program has been open to all

industry branches and technologi-

cal sectors as a source of support

for innovation efforts since 2008.

Total grants available through 2014

are roughly half a billion euro. The

maximum grant per applicant is

EUR 350,000.

CENTRAL INNOVATION PROGRAM SME - BEST PRACTICE EXAMPLEA NEW RUNNING EXPERIENCE – ADAPTIVE JOINTS FOR KNEE

AND FOOT PROSTHESES

One cooperative project received EUR 557,824 in funding over a two-

year period for the development of new adaptive joints for knee and

foot prostheses through the ZIM program. Project participants includ-

ed the Institute of Composite Structures and Adaptive systems of the

German Aerospace Center, the Faculty for Electronics, Informatics and

Mathematics (www.dlr.de/fa) of the University Paderborn (www.eim.

uni-paderborn.de), iXtronixs GmbH (www.ixtronics.com) in Paderborn,

and OTW Orthopädietechnik Winkler GmbH (www.winkler-ot.com) in

Minden. This project resulted in a new prosthesis product promoting

the natural and effort-saving motion sequence of the users. By imple-

menting this cooperation project all partners were able to create a

unique selling proposition for the product developed, thereby creating

new opportunities in international markets. The project also led to the

formation of the HAPS Technology GmbH, which is currently setting

up a high-tech production line for lightweight and biomechatronic ele-

ments in Paderborn.

Industry Overview 2013 www.gtai.com

9

10-49

50-99

100-150

POLAND

CZECH REPUBLIC

BELGIUM

THE NETHERLANDS

LUXEM-BOURG

AUSTRIA

Source: Bureau van Dijk (Markus database) 2012

Schleswig-Holstein

Niedersachsen

Mecklenburg-Vorpommern

Saxony-Anhalt

Brandenburg

Saxony

Thuringia

Bavaria

Hessen

North Rhine-Westphalia

Rheinland-Pfalz

Saarland

Baden-Württemberg

Berlin

Bremen

Hamburg

Number of Companies

Medical Technology Companies in Germany 2012

Germany is home to an extensive network of medical

technology companies. Highly interdisciplinary and

research oriented in nature, the medical technology

sector is characterized by highly innovative small and

medium-sized enterprises.

Leading-edge medical technology clusters provide

ideal conditions for technology transfer between sci-

entific institutions and private sector companies.

CUTTING-EDGE MEDICAL TECHNOLOGY IN GERMANY

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INVESTMENT CLIMATE

WORKFORCE

WORLD-CLASS EDUCATION STANDARDSGermany’s world-class education

system ensures that the highest

standards are always met. Eighty-

four percent of the German popula-

tion have been trained to university

entrance level or possess a recog-

nized vocational qualification – well

above the OECD average of 67 per-

cent. The country’s dual education

system – unique in combining the

benefits of classroom-based and

on-the-job training over a period of

two to three years – is specifically

geared to meet industry needs. The

German Chambers of Industry and

Commerce (IHK) ensure that exact-

ing standards are adhered to, guar-

anteeing the quality of training pro-

vided across the country. Germany

provides direct access to a highly

qualified and flexible labor pool to

meet industry needs while ensuring

that skilled and unskilled workers

are well prepared for the workplace.

DIVERSIFIED EDUCATION IN MEDICAL TECHNOLOGYAcademic training in the medical

technology sector in Germany is

of the highest caliber. In order to

maintain and enhance the country’s

excellent medical technology R&D

standards, key skills in engineer-

ing and natural sciences – and es-

pecially in information technology

– are taught in medical technology

training. Knowledge transfer and

the continuous flow of research-

ers between public and private re-

search institutions is one way of

staving off the shortage of emerg-

ing young academic talent. In recent

years the total number of students

in German universities has been

increasing, as has the share of stu-

dents in natural sciences and engi-

neering.

Numerous interdisciplinary cours-

es for the training of medical tech-

nicians exist. Having obtained a vo-

cational qualification in the metal or

electrical industry, it is possible to

gain further qualifications in medi-

cal technology. A number of univer-

sities also offer advanced courses

as a supplement to the traditional

technical fields of study. Individual

programs in biomedical and clini-

cal engineering are also available in

universities of applied sciences.

THRIVING SME SECTORThe German medical technology

sector is largely made up of small

and medium-sized enterprises.

Ninety-seven percent of all medical

technology firms in Germany em-

ploy less than 500 employees and

20 percent of all employees work in

businesses with less than 50 em-

ployees. Big companies with more

than 500 employees account for

roughly 60 percent of total turnover

in this sector. The small companies

(less than 50 employees) account

for around seven percent of total

turnover.

With an average of 101 employees

per company in 2012, the medi-

cal technology industry is typically

more small and medium scale than

is the case for German industry by

and large - with an average employ-

ee number of around 134 in 2013.

Based on the number of compa-

nies, sales, and total employment,

it counts as a smaller industry

within the manufacturing industry

that has developed in dynamic fash-

ion. However, in marked contrast to

the overall manufacturing sector

which has seen employment levels

decline over the past decade, the

medical technology industry work-

force continues to grow.

Employee Distribution by Company Size 2012

Employess

>1.000

500-999

250-499

100-249

50-99

1-49

Sources: SPECTARIS 2013

19%

31%

9%

13%

16%

12%

Industry Overview 2013 www.gtai.com

11

INVESTMENT STABILITY

OPEN AND TRANSPARENT MARKETSGerman law generally makes no

distinction between German and

foreign nationals regarding invest-

ments, available incentives or the

establishment of companies. The

legal framework for foreign di-

rect investment in Germany favors

the principle of freedom of foreign

trade and payment. There are no

restrictions or barriers to capital

transactions or currency transfers,

real estate purchases, repatriation

of profits, or access to foreign ex-

changes.

RELIABLE LOGISTICS INFRASTRUCTUREGermany’s infrastructure excel-

lence is confirmed by a number

of recent studies including the

Swiss IMD’s World Competitive-

ness Yearbook and various UNCTAD

investor surveys. The 2011-2012

Global Competitiveness Report of

the World Economic Forum (WEF)

ranked Germany second for infra-

structure in the world; singling out

Germany’s extensive and efficient

infrastructure for highly efficient

transportation of goods and pas-

sengers for special praise. Accu-

mulated in this score for Germany

are high marks for the quality of

roads and air transport, excellent

railroads and port infrastructure,

as well as its communications and

energy infrastructure.

COMPETITIVE LABOR COSTSHigh productivity rates and steady

wage levels make Germany an ex-

tremely attractive investment lo-

cation. Labor cost increase levels

have been the lowest in Europe in

recent years. German productivity

rates are more than five percent

greater than the average of the EU’s

15 core national economies, and

more than one quarter higher than

the OECD average. Highly flexible

working practices such as fixed-

term contracts, shift systems, and

24/7 operating permits contribute

to enhance Germany’s international

competitiveness as a suitable in-

vestment location for internation-

ally active businesses.

In economically challenging times,

a safe and attractive investment

like medical technology proves par-

ticularly attractive to investors. As

a comparatively low-risk invest-

ment, the medical industry requires

stable policy frameworks and suf-

ficient legal stability. Germany is

world renowned for its highly devel-

oped economic, legal and political

frameworks which provide inves-

tors – in all industry sectors – with

the necessary security for their

business investments.

INTERNATIONALLY COMPETITIVE TAX CONDITIONSGermany offers one of the most

competitive tax systems of the big

industrialized countries. For cor-

porations the average overall tax

burden is just below 30 percent.

Significantly lower rates are avail-

able in certain German municipali-

ties – up to eight percents less. The

overall corporate tax burden can

therefore be as low as 22.83 per-

cent. Moreover, Germany provides

an extensive network of double

taxation agreements (DTA) ensur-

ing that double taxation is ruled out,

e.g. when dividends are transferred

from a German subsidiary company

to the foreign parent company.

0% 5% 10%

Annual average growth expresssed as percentage of industry, construction and services.

Source: Eurostat 2013

Labor Cost Growth in Total Economy 2003-2012

1.6%2.3%

2.7%

2.7%

3.4%

5.2%

5.4%

6.1%

6.0%

GermanyFrance

Netherlands

Spain

UK

Czech Rep.

Poland

Hungary

Slovak Rep.

12

FINANCING & INCENTIVES

In Germany, investment projects

can receive financial assistance

through a number of different in-

struments. These instruments may

come from private sources or con-

sist of public incentives programs

available to all companies – regard-

less of country of provenance. They

fit the needs of diverse economic

activities at different stages of the

investment process.

EARLY STAGE INVESTMENT PROJECT FINANCINGTechnologically innovative start-

ups in particular have to rely solely

on financing through equity such as

venture capital (VC). In Germany,

appropriate VC partners can be

found through the German Private

Equity and Venture Capital Asso-

ciation (BVK). Special conferences

like the German Equity Forum pro-

vide another opportunity for young

enterprises to come into direct

contact with potential VC partners.

Public institutions such as devel-

opment banks (publicly owned and

organized banks which exist at the

national and state level) and public

VC companies may also offer part-

nership programs at this develop-

ment stage.

LATER STAGE INVESTMENT PROJECT FINANCINGDebt financing is a central financing

resource and the classic supple-

ment to equity financing in Ger-

many. It is available to established

companies with a continuous cash

flow. Loans can be borrowed for

day-to-day business (working capi-

tal loans), can help bridge tempo-

rary financial gaps (bridge loans)

or finance long-term investments

(investment loans).

Besides offers from commercial

banks, investors can access publicly

subsidized loan programs in Ger-

many. These programs usually of-

fer loans at attractive interest rates

in combination with repayment-

free start-up years - particularly

to small and medium-sized compa-

nies. These loans are provided by

the state-owned KfW development

bank and regional development

banks.

INVESTMENT CASH INCENTIVESWhen it comes to setting up produc-

tion or service facilities, investors

can count on a number of different

public funding programs. These

programs complement the financ-

ing of an investment project. Most

important are cash incentives pro-

vided in the form of non-repayable

grants applicable to co-finance in-

vestment-related expenditures such

as new buildings, equipment or ma-

chinery.

LABOR INCENTIVES AND R&D PROJECT GRANTSOnce the location-based investment

has been initiated, companies can

receive further subsidies to help put

together a workforce or for deploy-

ment in R&D projects. Labor-relat-

ed incentives play a significant role

in reducing the operational costs

incurred by new businesses. The

range of programs offered can be

classified into three main groups:

programs focusing on recruitment

support, training support, and wage

subsidies respectively. R&D project

funding is made available through

a number of different incentives

programs targeted at reducing the

operating costs of R&D projects.

Programs operate at the regional,

national, and European level and

are wholly independent from in-

vestment incentives. At the national

level, all R&D project funding has

been concentrated in the High-Tech

Strategy to push the development

of cutting-edge technologies. Sub-

stantial annual funding budgets are

available for diverse R&D projects.

Types of Incentives in Germany

Cash

Incentives

Investment Incentives Package

Operational Incentives Package

Interest-

Reduced LoansR&D Incentives

Labor-Related

Incentives

GRW

(Investment

Grants)

KfW Loans

(National Level)

State Development Bank Loans

Grants Recruitment

Support

LoansTraining

Support

Silent/Direct

Partnerships

Wage

Subsidies

+

Public

Guarantees

State

Guarantees

Combined State/Federal

Guarantees

13

SERVICES & PARTNERS

“HEALTH - MADE IN GERMANY”Health – Made in Germany is where

partners from abroad should look

first to discover how they can gain

access to and benefit from Ger-

many’s commitment to innovation,

quality and reliability in health care.

The initiative provides information,

links partners, and paves the way

to applying German know-how to

serving people around the globe.

Especially small and medium-sized

companies can benefit from a wide

range of services to support their

international business activities.

The website www.health-made-in-

germany.com is the place to start

looking for the latest information

about Germany’s health care in-

dustry and what it can do for you

- it provides an overview of the in-

dustry as well as information about

international markets and industry

events.

The initiative is designed to meet

the industry’s specific needs with a

focus on pharmaceuticals, medical

technologies, medical biotechnol-

ogy, telemedicine, and health care

services.

“Health - Made in Germany” is an

initiative by the Federal Ministry of

Economics and Technology.

SPECTARISSPECTARIS is the German indus-

try association for the high-tech

medium-sized business sector and

representative body in the areas of

medical technology, optical tech-

nologies and analytical, biological,

laboratory, and ophthalmic devices.

Innovation and growth characterize

the different industry sectors. Tech-

nologies developed here are used

in almost all branches of industry,

making them an important motor

for the German economy.

In the medical technologies sector,

SPECTARIS represents around 150

German capital goods and auxiliary

aid companies who mostly produce

high-tech products and have a pro-

nounced export orientation. Mem-

ber companies cover an extensive

research and applications envi-

ronment which includes medical

products for diagnostic and surgery

purposes to supply systems and an-

esthesia and intensive care devices.

The association also represents

manufacturers of ophthalmic de-

vices, large and small sterilisators,

medical functional room equip-

ment, respiratory home therapy,

rehabilitation aids, and orthopedic

technology.

BVMedBVMed, the German Medical Tech-

nology Association, represents

about 220 manufacturers and ser-

vice providers of medical devices.

The medical technology industry in

Germany amounts to EUR 23 billion

and employs about 170,000 people.

BVMed represents the entire range

of medical technologies, includ-

ing wound management products,

technical aids such as ostomy and

incontinence products or bandages,

plastic disposable items such as

syringes, catheters and cannulae,

as well as the implant field of intra-

ocular lenses, hip, knee, shoulder

and spinal implants, pacemakers

and defibrillators and even artificial

hearts. Homecare services and bio-

technology procedures, such as tis-

sue engineering, are further fields

of activity.

Germany Trade and Invest would

like to thank its partners for their

support and information provided

for this publication.

14

GERMANY TRADE & INVEST HELPS YOU

Germany Trade & Invest’s teams of

industry experts will assist you in

setting up your operations in Ger-

many. We support your project

management activities from the

earliest stages of your expansion

strategy.

We provide you with all of the indus-

try information you need – covering

everything from key markets and

related supply and application sec-

tors to the R&D landscape. Foreign

companies profit from our rich

experience in identifying the busi-

ness locations which best meet

their specific investment criteria.

We help turn your requirements into

concrete investment site propos-

als; providing consulting services to

ensure you make the right location

decision. We coordinate site visits,

meetings with potential partners,

universities, and other institutes ac-

tive in the industry.

Our team of consultants is at hand

to provide you with the relevant

background information on Germa-

ny’s tax and legal system, industry

regulations, and the domestic labor

market. Germany Trade & Invest’s

experts help you create the appro-

priate financial package for your in-

vestment and put you in contact with

suitable financial partners. Incen-

tives specialists provide you with

detailed information about available

incentives, support you with the ap-

plication process, and arrange con-

tacts with local economic develop-

ment corporations.

All of our investor-related services

are treated with the utmost confiden-

tiality and provided free of charge.

PROJECT MANAGEMENT ASSISTANCE

Coordination and

support of negot-

iations with local

authorities

Joint project

management with

regional develop-

ment agency

Project partner

identification

and contact

Market entry

strategy support

Business oppor-

tunity analysis and

market research

LOCATION CONSULTING /SITE EVALUATION

Final site

decision support

Site visit

organization

Site preselectionCost factor

analysis

Identification of

project-specific

location factors

Accompanying in-

centives application

and establishment

formalities

Administrative

affairs support

Organization of

meetings with

legal advisors and

financial partners

Project-related

financing and incen-

tives consultancy

Identification of

relevant tax and

legal issues

SUPPORT SERVICES

DECISION & INVESTMENTSTRATEGY EVALUATION

CONTACT

IMPRINT

PUBLISHER Germany Trade and Invest

Gesellschaft für Außenwirtschaft

und Standortmarketing mbH

Friedrichstraße 60

10117 Berlin

Germany

T. +49 (0)30 200 099-555

F. +49 (0)30 200 099-999

invest@gtai.com

www.gtai.com

EXECUTIVE BOARD

Dr. Benno Bunse, Chairman/CEO

Dr. Jürgen Friedrich, CEO

AUTHORDr. Sandra M. Bütow, Manager Investor Consulting Healthcare,

Germany Trade & Invest, sandra.buetow@gtai.com

EDITORWilliam MacDougall, Germany Trade & Invest

LAYOUTGermany Trade & Invest

PRINTDas Druckhaus Bernd Brümmer, Bonn

SUPPORTPromoted by the Federal Ministry of Economics and Technology and the Federal Government

Commissioner for the New Federal States in accordance with a German Parliament resolution.

NOTES©Germany Trade & Invest, November 2013

All market data provided is based on the most current market information available at the time of

publication. Germany Trade & Invest accepts no liability for the actuality, accuracy, or completeness

of the information provided.

ORDER NUMBER13899

About Us

Germany Trade & Invest is the foreign trade and inward in- vestment agency of the Federal Republic of Germany. The organization advises and supports foreign companies seeking to expand into the German market, and assists companies established in Germany looking to enter foreign markets.

All inquiries relating to Germany as a business location are trea- ted confidentially. All investment services and related publi-cations are free of charge.

Promoted by the Federal Ministry of Economics and Technology and the Federal Government Commissioner for the New Federal States in accordance with a German Parliament resolution.

www.gtai.com

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: ©

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Germany Trade & Invest

Friedrichstraße 60

10117 Berlin

Germany

T. +49 (0)30 200 099-555

F. +49 (0)30 200 099-999

invest@gtai.com

www.gtai.com/medtech